What is escrow and what role does it play in Colorado transactions?

• A. Escrow is a neutral third party that holds funds and documents until closing conditions are met, ensuring proper clearance of funds.
• B. Escrow is the seller’s attorney responsible for title transfer.
• C. Escrow is the mortgage lender that approves funding.
• D. Escrow is the buyer’s real estate agent.

Answer: (B)

Escrow is a neutral third party that holds funds and documents until closing conditions are met, ensuring funds are available and disbursed correctly and that the necessary paperwork is ready for recording. In Colorado, the closing is typically handled by a title company or closing attorney who acts as the escrow agent. Their duties include receiving the buyer’s funds, paying off existing liens or mortgages, prorating property taxes and HOA dues, preparing the settlement statement, coordinating title transfer, and recording the deed and title insurance once all conditions are satisfied. This arrangement protects both sides by making sure money and documents aren’t handled prematurely and that everything aligns before the transfer occurs. Escrow is not the seller’s attorney, the mortgage lender, or the buyer’s real estate agent; it’s the neutral intermediary that facilitates a safe, orderly transaction.